Strong mar­ket, gift push UA en­dow­ment past $1B

Arkansas Democrat-Gazette - - ARKANSAS INSIDE - JAIME ADAME

FAYETTEVILLE — A big boost in Au­gust from the Wal­ton Fam­ily Char­i­ta­ble Sup­port Foun­da­tion and a year of dou­ble-digit in­vest­ment re­turns have lifted the value of en­dow­ment as­sets sup­port­ing the Univer­sity of Arkansas, Fayetteville be­yond $1 bil­lion, the univer­sity an­nounced Thurs­day.

The $120 mil­lion Wal­ton gift sup­port­ing arts ed­u­ca­tion came af­ter the June 30 close of the school’s fis­cal year, a 12-month pe­riod that saw UA’s en­dow­ment as­sets in­crease in value to $996 mil­lion, the univer­sity said. The to­tal at the close of the pre­vi­ous fis­cal year was $898.9 mil­lion.

Univer­sity en­dow­ments func­tion as per­ma­nent sav­ings funds, with about 5 per­cent of the en­dow­ment spent every year in ar­eas in­clud­ing aca­demic pro­grams, en­dowed po­si­tions such as aca­demic chairs, and fel­low­ships and schol­ar­ship aid for stu­dents. The Univer­sity of Arkansas Foun­da­tion man­ages as­sets for the Fayetteville cam­pus and some oth­ers in the UA Sys­tem.

“This is a ma­jor mile­stone and to be cel­e­brated be­cause the health of our en­dow­ment is an in­di­ca­tor of fu­ture suc­cess and se­cu­rity for the univer­sity,” school Chan­cel­lor Joe Stein­metz said in a state­ment that called the en­dow­ment “our nest egg” and as­serted that it’s “more im­por­tant than ever to have a strong en­dow­ment as we aim to keep tu­ition as low as pos­si­ble and re­dou­ble stu­dent suc­cess ef­forts.”

A pre­cise to­tal was not re­leased, but with en­dowed as­sets top­ping $1 bil­lion — break­ing that thresh­old in July, UA spokesman Mark Rush­ing said — the univer­sity meets a goal first set more than a decade ago un­der Chan­cel­lor John White,

who wanted to reach the bil­lion-dol­lar mark by 2010.

The past 10 years have seen ups and downs for UA and many univer­sity en­dow­ments, how­ever. The en­dow­ment sup­port­ing the Fayetteville cam­pus reached $876.8 mil­lion at the close of fis­cal 2007, then two years later dropped to $612.2 mil­lion af­ter the stock mar­ket tum­bled dur­ing the most re­cent eco­nomic re­ces­sion.

It wasn’t un­til fis­cal 2014 that UA’s yearly en­dow­ment to­tal sur­passed its value at the close of fis­cal 2007.

While other schools also saw dips, UA, Fayetteville has in re­cent years seen its rank­ing slip in the an­nual en­dow­ment sur­vey by the Na­tional As­so­ci­a­tion of Col­lege and Univer­sity Busi­ness Of­fi­cers and Com­mon­fund In­sti­tute.

The group will not re­lease its an­nual re­port in­clud­ing 2017 data un­til Jan­uary, and UA will not be listed among schools with bil­lion-dol­lar en­dow­ments be­cause the re­port is based on val­ues as of the close of fis­cal 2017.

UA’s 2016 rank­ing in the re­port slipped three spots to 103rd among U.S. and Cana­dian in­sti­tu­tions. That fol­lowed a 5.2 per­cent drop in the en­dow­ment’s mar­ket value over the 12-month pe­riod that ended June 30 of last year, the value falling be­cause new en­dowed gifts failed to off­set in­vest­ment losses.

Other schools also re­ported de­clines in fis­cal 2016, though, on av­er­age, not as large. An Arkansas Demo­crat-Gazette anal­y­sis of Na­tional As­so­ci­a­tion of Col­lege and Univer­sity Busi­ness Of­fi­cers and Com­mon­fund In­sti­tute data from the re­port found that for schools like UA with an en­dow­ment value be­tween $500 mil­lion and $1 bil­lion, the av­er­age de­crease was 3.7 per­cent.

The Univer­sity of Arkansas Foun­da­tion over­sees funds in an “in­vest­ment pool” that in­cludes Fayetteville cam­pus as­sets. The most re­cent fis­cal year saw in­vest­ment re­turns of 15.4 per­cent, the univer­sity an­nounced.

Over the same 12-month time pe­riod, the Stan­dard & Poor’s 500 stock in­dex saw a one-year re­turn of 15.46 per­cent ac­cord­ing to data from YCharts, a fi­nan­cial data re­search web­site. The stock in­dex en­com­passes 500 top U.S. com­pa­nies and is con­sid­ered a bench­mark eco­nomic in­di­ca­tor.

Rush­ing said in an email that the UA Foun­da­tion’s in­vest­ments in­clude both equities and bonds. The in­vest­ments pool is con­sid­ered to have less risk and should not be com­pared only with the S&P 500, Rush­ing said.

He said that among schools that have an­nounced en­dow­ment re­turns, only a few have re­ported re­turns above 15 per­cent, “mak­ing this re­turn rate im­pres­sive.” Rush­ing noted that Har­vard has re­ported an 8.1 per­cent in­vest­ment re­turn on its en­dowed funds.

Ken Redd, direc­tor of re­search for the Na­tional As­so­ci­a­tion of Col­lege and Univer­sity Busi­ness Of­fi­cers, said com­pre­hen­sive data re­main un­avail­able but he ex­pects typ­i­cal in­vest­ment gains for schools to be in the 10-15 per­cent range.

The UA Foun­da­tion’s in­vest­ment ob­jec­tives, ac­cord­ing to its most re­cent fi­nan­cial re­port, are to sup­port higher ed­u­ca­tion and to “en­hance the pur­chas­ing power by gen­er­at­ing an av­er­age an­nual real to­tal re­turn (net of in­vest­ment man­age­ment fees) in ex­cess of the spend­ing rate over the long-term with min­i­mal re­turn volatil­ity.”

The foun­da­tion paid about $3.8 mil­lion in cus­to­dial and in­vest­ment ad­vi­sory fees for the 12-month-pe­riod that ended June 30, ac­cord­ing to Rush­ing. The amount is an in­crease from the ap­prox­i­mately $2.2 mil­lion listed in a 2016 fi­nan­cial re­port for the same type of fees.

About 38 en­dow­ments for pub­lic uni­ver­si­ties or pub­lic univer­sity sys­tems have en­dow­ments of greater than $1 bil­lion ac­cord­ing to the most re­cent com­pre­hen­sive data, said Steven Bloom, direc­tor of gov­ern­ment re­la­tions for the non­profit ad­vo­cacy group the Amer­i­can Coun­cil on Ed­u­ca­tion.

Redd called it “a rare thing to hap­pen, so it’s quite an achieve­ment.” Ninety-three schools had 2016 en­dow­ment funds val­ued at more than $1 bil­lion, ac­cord­ing to the an­nual sur­vey of the Na­tional As­so­ci­a­tion of Col­lege and Univer­sity Busi­ness Of­fi­cers.

En­dow­ment as­sets can­not be spent solely to lower col­lege costs, Bloom said.

“En­dow­ments are made up of hun­dreds, some­times thou­sands of sep­a­rate funds,” Bloom said. Gen­er­ally, such funds must be spent in ac­cor­dance to spe­cific agree­ments with donors, Bloom said.

The UA Foun­da­tion dis­trib­uted to or on be­half of the Univer­sity of Arkansas, Fayetteville cam­pus more than $50 mil­lion in fis­cal 2017, Rush­ing said, in­clud­ing funds for a schol­ar­ship pro­gram known as Ad­vance Arkansas.

“These schol­ar­ship en­dow­ments ben­e­fit aca­dem­i­cally promis­ing stu­dents from Arkansas that have fi­nan­cial need with schol­ar­ship sup­port rang­ing from $4,000 to full tu­ition awards. Ad­vance Arkansas en­dowed schol­ar­ships help the univer­sity re­cruit, re­tain and grad­u­ate Arkansas stu­dents. That’s just one ex­am­ple of the many vi­tal pos­i­tive im­pacts the en­dow­ment pro­vides for the univer­sity on a con­tin­ual ba­sis,” Rush­ing said.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.